UCO Bank faces ₹2,946.96 crore GST demand in 2025

Regulatory order disclosed by the bank

UCO Bank has disclosed a large indirect tax order after receiving a demand from the Additional Commissioner of CGST, Mumbai South Commissionerate. The order is dated February 6, 2025, and was reported through the bank’s regulatory filing. The demand relates to alleged short payment of GST and excess availment of input tax credit (ITC). The period under review covers FY 2017-18 and FY 2018-19. The order has been issued under Section 74 of the CGST Act, 2017, which deals with cases involving alleged tax evasion.

What the ₹1,473.48 crore demand means

As per the disclosure, the GST demand is ₹1,473.48 crore. The order also imposes an equivalent amount as penalty, along with interest “as applicable”. Taken together, the demand plus matching penalty totals about ₹2,946.96 crore, excluding interest. The bank has stated that it believes the demand “lacks legal merit”. It also indicated that it will contest the order before an appropriate authority and expects it to be set aside by a court of competent jurisdiction.

Bank’s stated response and next steps

UCO Bank has rejected the claims underlying the order, saying they do not have statutory merit and may not stand judicial scrutiny. The bank has also said it has objections and intends to challenge the directive. Beyond the intent to litigate, no further timeline or forum was detailed in the provided information. Still, the disclosure signals that the matter is likely to move into the appeals process. For investors, the key near-term variable is the pace and outcome of the legal contest, including any interim relief.

Capital position and QIP approval reference

Separately, a management transcript in the provided text indicates the bank already has board approval for a qualified institutional placement (QIP). The same transcript also refers to asset quality guidance being “thrown down,” with guidance moving from 1.1% to 1.25% previously to around 1% and “less than 1%” this year. It also mentions that the bank continued the remaining provision of “160 odd” crore during the financial year, without reversal, as a payment was expected in a later period. These points provide context on capital and provisioning decisions alongside the new tax exposure.

Key financial and market snapshot (Apr-Dec)

For the nine months ended December, UCO Bank reported net profit of ₹1,967 crore, up almost 10% year-on-year. Total revenue from operations for the same period was ₹22,376 crore, up 5% year-on-year. Capital adequacy ratio (Basel III) stood at 17.43% at the end of December, compared with 17.89% a quarter earlier and 16.25% a year earlier. In market trade referenced in the text, the stock ended at ₹29.66 on the NSE, up almost 1% from the previous close.

NCLT Kolkata dismissal in a separate case

In another legal development referenced in the text, the National Company Law Tribunal (NCLT) in Kolkata dismissed an insolvency petition filed by UCO Bank against Nicco Uco Alliance Credit Ltd. The petition concerned an alleged default of ₹846 crore. The tribunal held that the plea was barred by limitation and could not be entertained. It also observed that the bank approached the insolvency forum too late, noting a significant time gap.

Government capital infusion and stake impact

The text also cites UCO Bank’s expectation of receiving ₹750 crore from the government in a month to strengthen capital. It states that the bank was supposed to receive ₹1,200 crore in total and had already received the first tranche of ₹450 crore in March. An official cited in the text said the remaining ₹750 crore could come through preferential allotment of shares. The same section notes that this issue could reduce the government’s stake to 52% from 64%.

Tax litigation context: DICGC premium credit ruling

The provided material also includes excerpts from a separate indirect tax dispute involving Cenvat credit on service tax paid on insurance premiums to DICGC. The text states that such credit was held eligible and could not be denied, and that banks which reversed amounts under Rule 6(3B) were entitled to credit of the service tax paid on input services with nexus to output services. This appears as broader legal context on financial-sector tax disputes rather than a specific disclosure by UCO Bank. Still, it underlines how classification, credit eligibility, and procedural compliance can materially influence tax outcomes in the sector.

Why the GST order matters for investors

A demand of this size can matter because it raises the scale of contingent liabilities, even when disputed. The bank’s stated intent to challenge the order reduces immediate clarity on final cash impact, but investors typically track whether matters move toward settlement, stay orders, or adverse appellate outcomes. Alongside that, the bank’s capital adequacy and ongoing capital-raising references (government infusion and QIP approval) frame how it may absorb legal and regulatory shocks. The stock’s cited move of about 1% on the day mentioned does not, by itself, indicate a settled market view, but it shows the disclosure arrived amid routine trading rather than an extreme price reaction.

Conclusion

UCO Bank’s February 2025 disclosure brings a ₹1,473.48 crore GST demand and an equivalent penalty into focus for FY 2017-18 and FY 2018-19, with interest to be determined. The bank has said it will contest the order and believes it lacks legal merit. Separately, the text highlights improving year-on-year profitability for Apr-Dec, a 17.43% Basel III capital adequacy ratio, and ongoing capital actions including government infusion and a QIP approval reference. The next confirmed step is the bank’s move to challenge the GST order before the appropriate authority.